On 11 September 2024, the Government published the long-anticipated Renters' Rights Bill. It is expected that this legislation will become an Act before the new year.
There are several key elements in the Bill that landlords should familiarise themselves with now to prepare for its impact.
The End of Section 21
It's now official that Section 21 'no-fault' evictions are being phased out.
The Bill aims to achieve this by abolishing Assured Shorthold Tenancies (ASTs) and replacing them with Periodic Assured Tenancies, with a maximum term of one month. This significant shift means that landlords will no longer be able to recover possession using Section 21.
At a future date, which will be specified in legislation, all ASTs in England—whether statutory, periodic, or fixed-term—will convert into Periodic Assured Tenancies, unless Section 21 proceedings are already in progress. This date is likely to come soon after the Bill receives Royal Assent, in line with Labour's election pledge.
New Grounds for Possession under Section 8
In our previous articles, we discussed some of the new grounds which were proposed to be added to Section 8.
As with the previous iteration of this Bill (the Renters (Reform) Bill), there will be new grounds of possession covering:
- The landlord wishing to sell the property; and
- The landlord, or a family member, wanting to live in the property.
Neither of these grounds can be used within the first year of the tenancy, and the tenant's time under the previous AST will count towards this period. Additionally, landlords will be required to provide four months' notice. If the landlord seeks possession to sell, there will be a 12-month restriction preventing the property from being re-let or marketed to let after serving notice.
If a landlord re-lets or markets the property before this period ends, they could face a fine of up to £7,000 imposed by the local authority.
The previously proposed Ground 8A, relating to rent arrears, has been scrapped. However, Ground 8 (mandatory possession for rent arrears) remains, with changes to the minimum arrears period—from two months to three months—and an extended notice period of four weeks, up from two.
Prescribed Documents
Landlords who have acquired properties with historic tenancies where original owners failed to comply with Section 21 requirements, such as serving gas safety certificates and EPCs, can breathe a small sigh of relief. Under Section 8, it will not be necessary to serve these documents at the outset of the tenancy in order to seek possession.
However, landlords should still ensure compliance with legal requirements for providing these documents, as failure to do so could create significant problems.
It is important to note that no possession order can be made (except for anti-social behaviour grounds) under this Bill if deposit protection requirements have not been met.
Rent Repayment Orders
The Renters' Rights Bill also introduces changes to Rent Repayment Orders (RROs). Currently, responsibility for breaches of HMO (House in Multiple Occupation) requirements falls on the party managing the property. For landlords who have entered into rent-to-rent schemes, this has historically meant that the intermediate landlord was liable.
Under the new Renters Rights Bill, superior landlords will be liable for rent repayment orders. Landlords should therefore exercise caution when entering rent-to-rent arrangements and ensure due diligence is carried out. While guaranteed rent and reduced administrative involvement may be appealing, these arrangements could result in higher costs due to rent repayment orders, far exceeding any potential savings.
Furthermore, the period covered by RROs will increase from 12 months to 24 months, and tenants will have two years to apply for an order.
The Bill also introduces new offences that could lead to a rent repayment order, including:
- Misuse of a possession ground
- Breach of a letting restriction
- Continued breach after a civil penalty has been imposed
- Breach of the Landlord Redress Scheme
- Providing false information to the landlord database
The tribunal will also be able to consider previous RROs or civil penalties when deciding on an award.
Illegal Evictions
As landlords will know, unlawfully evicting a tenant breaches Section 1 of the Protection from Eviction Act 1977 and carries criminal liability. The Renters' Rights Bill extends this by giving local authorities the power to impose civil penalties of up to £40,000 for breaches of the PEA.
Ban on Rent Bidding
The Bill will ban landlords and agents from requiring potential tenants to bid on rent or encouraging offers above the advertised rent. Moreover, landlords and agents will be prohibited from letting properties for more than the advertised amount. So, in theory, no more bidding wars!
Rent Increases
Under the new Periodic Assured Tenancies, rents can only be raised once a year using the Section 13 procedure under the Housing Act 1988. Currently, tenants can challenge a Section 13 rent increase at the First-tier Tribunal, which determines whether the proposed rent exceeds market rates.
The Bill narrows the Tribunal's scope, allowing it to determine rent that is the lower of (a) the market rent or (b) the landlord's proposed rent. Additionally, the Tribunal will have the power to determine the validity of a Section 13 notice, which it cannot do at present.
Section 10A Landlord and Tenant Act 1985 – Awaab's Law
Awaab's Law, already in effect for social landlords, will also be applied to the private sector. While it does not extend landlords' repair obligations beyond those already established under Sections 9A and 11 of the Landlord and Tenant Act 1985, it imposes a timeframe for responding to defect complaints. Private landlords should closely monitor the regulations once issued and ensure that all internal systems are updated to comply.
Pets
As previously in our previous article on the old iteration of the Bill, tenants will now be allowed to keep pets in rental properties. However, the Bill implies that tenants must have pet insurance, and failing to do so would constitute a breach of the tenancy.
Discrimination
The Bill introduces a blanket ban on landlords refusing to rent to tenants who receive benefits or have children, unless there is a legitimate reason. Clauses in mortgages or insurance policies that exclude benefits claimants or families with children will be unenforceable and void.
Landlords can still take into account a prospective tenant's income to assess whether they can realistically afford the rent.
The Landlord Database
The Bill also includes a provision for a national landlord database. Tenants will be able to search this database to check whether landlords have complied with legal obligations. The Secretary of State can, by regulations, specify what information in the database is to be available to the public (Councils also get access).
Details such as gas safety certificates, EPCs, and EICRs may be included, as well as any convictions or civil penalties. Failure to comply with the database requirements could result in civil penalties of up to £7,000, with prosecution also possible for more serious breaches.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
